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Offset

Definition: A funding source used to pay for new government spending, usually comprised of reductions to, or elimination of, other government programs.

What it means: When Congress passes legislation that costs the government money — with the exception of the annual appropriations bills — they look to find “offsets,” or savings from other government programs to “pay for” the new legislation. Sometimes, offsets are colloquially referred to as “pay-fors”— literally, paying for something that the government wants to buy. Finding an offset can be a challenge because every Member of Congress has specific priorities and programs he or she wants to protect and taking funding from one program to pay for another often leads to internal debates between political parties or chambers.

History: Off and on over the past 20 years, Congress has operated under a mechanism called PAYGO, under which any new government spending needed to be offset by savings from (or cuts to) current programs. In 2010 Congress passed a new Pay-As-You-Go Act, thus making PAYGO mandatory. However, Congress will suspend this law or exempt some spending from PAYGO rules; for example to pass legislation for disaster relief, emergency spending to stimulate the economy, or the 2017 tax cut package.